TD Ameritrade, Inc., member FINRA/SIPC/NFA, is a subsidiary of TD Ameritrade Holding Corporation. TD Ameritrade is a trademark jointly owned by TD

Transcription

1 TD Ameritrade, Inc., member FINRA/SIPC/NFA, is a subsidiary of TD Ameritrade Holding Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.

2 SAFE HARBOR This document contains forward-looking statements within the meaning of the federal securities laws. We intend these forward-looking statements to be covered by the safe harbor provisions of the federal securities laws. In particular, any projections regarding our future revenues, expenses, earnings, capital expenditures, effective tax rates, client trading activity, accounts or stock price, as well as the assumptions on which such expectations are based, are forwardlooking statements. These statements reflect only our current expectations and are not guarantees of future performance or results. These statements involve risks, uncertainties and assumptions that could cause actual results or performance to differ materially from those contained in the forward-looking statements. These risks, uncertainties and assumptions include, but are not limited to: general economic and political conditions and other securities industry risks, fluctuations in interest rates, stock market fluctuations and changes in client trading activity, credit risk with clients and counterparties, increased competition, systems failures, delays and capacity constraints, network security risks, liquidity risks, new laws and regulations affecting our business, regulatory and legal matters and uncertainties and other risk factors described in our latest Annual Report on Form 10-K, filed with the SEC on Nov. 26, These forward-looking statements speak only as of the date on which the statements were made. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by the federal securities laws. 2

3 OUR MISSION To Be The Better Investment Firm For Today s Investor 3

4 SIX INVESTMENT THEMES FOR TD AMERITRADE 1. Unique and differentiated business model 2. Market leadership in trading 3. Premier asset gatherer 4. Unique relationship with TD 5. Well-positioned for rising interest rates 6. Good stewards of shareholder capital CONTINUE TO BUILD LONG-TERM EARNINGS POWER AND DEPLOY/RETURN CAPITAL TO FURTHER ENHANCE SHAREHOLDER VALUE 4

5 1. UNIQUE AND DIFFERENTIATED BUSINESS MODEL CLIENT NEEDS TRADING, INVESTING, ADVICE Client-Centric Multi-Channel Delivery Web Mobile Phone Education Branch RIAs Broad Product Range Open Architecture Tools and information Seminars and coaching Planning services Packaged products Cash management Well-aligned with Secular Growth Trends (1) Growth in the Internet Growth in Mobile Growth in active traders/self-directed investors Growth in household financial assets & savings Advisors move toward independent models A UNIQUE AND DIFFERENTIATED BUSINESS MODEL WELL-ALIGNED WITH SECULAR GROWTH TRENDS (1) Sources: Cerulli, ICI, Federal Reserve Flow of Funds Report, Tower Group Active Trader Report. 5

6 UNIQUE AND DIFFERENTIATED BUSINESS MODEL 60% 50% 40% 30% 20% 10% 0% 46% 42 Operating Margin Forecasted Operating Margin Range 38% 38% Return on Avg. Client Assets (bps) (1) Forecasted Range 35% FY09 FY10 FY11 FY12 FY % EPS (3) $1.10 $1.00 $1.11 $1.06 $1.00-$1.20 (2) Business model combined with TD Bank relationship drives: Low capital intensity High return on equity Strong cash and capital generation Cash generation approximates net income Industry-leading operating margin (4) Expense discipline (1) Return on average client assets (ROCA) = annualized pre-tax income divided by average client assets. (2) FY13 forecast per 10/29/12 outlook statement. (3) Earnings per diluted share (EPS). (4) Source: based on last 12 months publicly available reports for E*Trade Financial and Charles Schwab. 6

7 2. MARKET LEADERSHIP IN TRADING (1) Trades Per Day & Activity Rate (2) Average Client Trades Per Day (K) FY09 FY10 FY11 FY12 (3) FY13 Activity 7.3% (4) 6.9% 7.2% 6.3% % Rate (2) 399 Forecasted Range (K) Challenging economic/market environment Low volatility and exchange volumes Growth Strategies Tiered platform strategy Product proliferation: Derivatives (5) 36% of Fiscal 2012 trades per day Mobile nearly 8% of Fiscal 2012 trades per day 2012 Barron s survey (6) Top composite score of peer group (7) (1) Source: Internally estimated daily average revenue client trades (DARTS) based on last twelve months publicly available reports for E*Trade Financial and Charles Schwab. (2) Funded account activity rate (AR%). Average client trades per day during the period divided by the average number of total funded accounts during the period. (3) FY13 forecast per 10/29/12 outlook statement. (4) Pro-forma combined with thinkorswim funded activity rate (trades per day): FY09 8.1% (419K); Derivatives (trades per day): FY09 20%. (5) Derivatives include options, futures, and foreign exchange (Forex) trades per day. (6) Source: TD Ameritrade was evaluated against 26 others in the 2012 Barron s Online-Broker review, March 10, (7) Comprised of E*Trade Financial, Fidelity, Scottrade and Charles Schwab. 7

8 3. PREMIER ASSET GATHERER $60 $50 $40 $30 $20 $10 Net New Client Assets ($B) (1) $27 $34 Forecasted Range ($B) $41 $41 $33-52 $0 FY09 FY10 FY11 FY12 FY13 Annualized Growth (2) 10% 11% 12% 11% 7-11% (3) Industry leading asset gatherer (4) Four consecutive years of doubledigit growth Sales and service culture Strong momentum in both retail and institutional Strong retail contributions from cross-selling and TD Bank (5) initiative Robust breakaway brokers (BAB) trends Existing RIA growth (1) Net new assets (NNA) consists of total client asset inflows, less total client asset outflows, excluding activity from business combinations. Client asset inflows include interest and dividend payments and exclude changes in client assets due to market fluctuations. Net new assets are measured based on the market value of the assets as of the date of the inflows and outflows. (2) NNA growth rate is annual net new assets as a % of client assets as of the beginning of the period. (3) FY13 forecast per 10/29/12 outlook statement. (4) Source: Annual NNA growth rate as a % of client assets as of the beginning of the period based on last twelve months of publicly available reports for E*Trade Financial and Charles Schwab. (5) TD Ameritrade, Inc. and TD Bank, N.A. are affiliated through their parent companies. 8

9 MARKET FEE-BASED (1) REVENUE GROW THIRD REVENUE STREAM $275 $250 $225 $200 $175 $150 $125 $100 $75 $50 Market Fee-Based Revenue ($M) (1) Fiscal 2012 Forecasted Range ($M) CAGR: 36% $76 $119 $158 $193 $250 $220 FY09 FY10 FY11 FY12 FY13 (2) Strong growth trends Increased distribution capacity Principal products: Amerivest AdvisorDirect Mutual Funds Fiscal 2013 Outlook Target revenue growth: 15-25% growth annually Enhanced product set, sales process and training Amerivest/AdvisorDirect products now aligned with target markets (1) Investment product fee revenue less money market mutual fund revenue. (2) FY13 forecast per 10/29/12 outlook statement. 9

10 4. UNIQUE RELATIONSHIP WITH TD (1) TD OWNS ~ 45% of TD AMERITRADE (2) TD Ameritrade sweeps client cash from brokerage accounts into TD Bank ($61B as of 9/30/12) Economics and rewards of retail deposit banking without risk or capital requirements of banking TD Asset Management provides money market mutual funds to TD Ameritrade clients ($5B as of 9/30/12) TD retains 9-10 bps; TD Ameritrade retains balance of management fee TD Ameritrade provides access to US Markets for TD Waterhouse UK/Canada clients. TD Ameritrade/TD Bank cross-selling opportunities Provider of wealth management services for TD Bank s 1,300 US stores (1) Client cash is held in FDIC-insured deposit accounts (IDA) at TD Bank, N.A. and TD Bank USA, N.A. TD Ameritrade, TD Bank, N.A.,TD Bank USA, N.A., TD Asset Management, TD Waterhouse U.K., and TD Waterhouse Canada are affiliated through The Toronto-Dominion Bank. (2) As of September 30,

11 5. WELL-POSITIONED FOR RISING INTEREST RATES $90 $80 $70 $60 $50 $40 $30 $20 $10 $0 Ending Balances ($B) Money Market Mutual Funds Interest Earning Assets IDA (1) $61 $15 $16 $30 $66 $9 $13 $44 $77 $8 $12 $57 $83 $5 $15 $63 Sep '09 Sep '10 Sep '11 Sep '12 Immediate benefit with Fed Funds increases, but capped (2) Immediate benefit with Fed Funds increases Immediate benefit with additional benefit over time with re-pricing of laddered investment portfolio Interest rate sensitive assets (3) of $83B, up 8% year over year Continued focus on organic growth Annual impact to EPS (4) on +100bps: Yr. 1=+$0.28 Yr. 2=+$0.39 Yr. 3=+$0.50 (1) Client cash is held in FDIC-insured deposit accounts (IDA) at TD Bank, N.A. and TD Bank USA, N.A. TD Ameritrade, TD Bank, N.A., and TD Bank USA, N.A. are affiliated through The Toronto-Dominion Bank. (2) Ending balances as of Sep. 30, 2012 consisted of $8.6B in client margin balances, $3.9B in segregated cash, and $2.4B in other balances. (3) Interest rate sensitive assets consist of spread-based assets and money market mutual funds. Ending balances as of Sep. 30, (4) Impact on spread-based and money market mutual fund revenues in the first twelve months following an interest rate increase. Assumes fed funds increase results in a parallel shift to the LIBOR/SWAP yield curve. Sensitivity relates to first 100bps increase. Assumes ~ $9-10B matures annually in the IDA portfolio. 11

12 IDA (1) NET REVENUE TREND GROWTH OFFSETTING RATE COMPRESSION ($B) Avg. IDA Balances ($B) IDA Revenue ($M) ($M) $75 $70 Total Revenue FY10: $682 Total Revenue FY11: $763 12% YoY Growth Total Revenue FY12 : $828 9% YoY Growth $225 $65 $60 $55 $50 $170 $180 $177 $179 $188 $197 $200 $54.0 $205 $209 $206 $207 $61.4 $58.8 $58.4 $59.0 $200 $175 $45 $40 $35 $155 $39.3 $41.8 $43.1 $44.7 $46.8 $48.6 $150 $125 $30 $32.6 $25 DecQ '09 MarQ '10 JunQ '10 SepQ '10 DecQ '10 MarQ '11 JunQ '11 SepQ '11 DecQ '11 MarQ '12 JunQ '12 SepQ '12 Net Yield 1.87% 1.73% 1.70% 1.61% 1.56% 1.60% 1.60% 1.45% 1.37% 1.42% 1.38% 1.32% Avg. Fed Funds (2) 0.12% 0.14% 0.19% 0.19% 0.19% 0.16% 0.09% 0.08% 0.07% 0.11% 0.16% 0.15% 5YR Swap Rates (2) 2.65% 2.70% 2.49% 1.76% 1.74% 2.32% 2.07% 1.44% 1.32% 1.17% 1.08% 0.86% (1) Client cash is held in FDIC-insured deposit accounts (IDA) at TD Bank, N.A. and TD Bank USA, N.A. TD Ameritrade, TD Bank, N.A., and TD Bank USA, N.A. are affiliated through The Toronto-Dominion Bank. (2) Source: Bloomberg quarterly average. *Certain totals may not foot due to rounding. $100 12

13 6. GOOD STEWARDS OF SHAREHOLDER CAPITAL STRONG CASH GENERATION AND STRONG FINANCIAL POSITION $1.0 Net Income ($B) Returned/Deployed ($B) (1) 86% returned/deployed (1) in last 4 years $0.8 $0.6 $0.6 $0.8 $0.6 $0.6 $0.6 $0.5 S&P upgraded to A in Fiscal 2012 Third upgrade since 2009 $0.4 $0.2 $0.0 $0.4 $ % 73% 81% 56% FY09 FY10 FY11 FY12 Fiscal 2013, targeting 65%- 80% Pay down $250M tranche of debt in December Increasing dividend by 50% to $0.09/quarter (1) Cash used for M&A, debt repayments, share repurchases, and dividends divided by net income. Excludes shares repurchased for payroll taxes on equity award distributions. 13

14 FISCAL 2013 FOCUS Challenging global environment Cautiously optimistic on U.S. economy Maintain our momentum in trading and asset gathering Grow third revenue stream, market fee-based revenue (1) Remain disciplined on expenses Lean will self-fund growth initiatives Return of capital strategy Targeting 65-80% of earnings in Fiscal 2013 Fiscal 2013 EPS Outlook Range: $1.00-$1.20 (2) CONTINUE TO BUILD LONG-TERM EARNINGS POWER AND DEPLOY/RETURN CAPITAL TO FURTHER ENHANCE SHAREHOLDER VALUE (1) Investment product fee revenue less money market mutual fund revenue. (2) FY13 forecast per 10/29/12 outlook statement. 14

15 CREATING LONG-TERM SHAREHOLDER VALUE 1. Unique and differentiated business model 2. Market leadership in trading 3. Premier asset gatherer 4. Unique relationship with TD 5. Well-positioned for rising interest rates 6. Good stewards of shareholder capital CONTINUE TO BUILD LONG-TERM EARNINGS POWER AND DEPLOY/RETURN CAPITAL TO FURTHER ENHANCE SHAREHOLDER VALUE 15

16 TD Ameritrade, Inc., member FINRA/SIPC/NFA, is a subsidiary of TD Ameritrade Holding Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.

17 SENSITIVITY ANNUAL IMPACT TO EPS 3K average client trades per day = $ % funded activity rate (1) = $0.01 $4.1B fee-based assets (2) = $0.01 $0.5B spread-based assets (3) = $ K new accounts = $ bps fed move = +$0.07 (4) (1) Funded account activity rate. Average client trades per day during the period divided by the average number of funded accounts during the period. (2) Client assets invested in money market mutual funds, other mutual funds and Company programs such as AdvisorDirect and Amerivest, on which we earn fee revenues. (3) Client and brokerage-related asset balances, including client margin balances, segregated cash, insured deposit account balances, deposits paid on securities borrowing and other cash and interest-earning investment balances. (4) Impact on spread-based and money market mutual fund revenues in the first twelve months following an interest rate increase. Assumes fed funds increase results in a parallel shift to the LIBOR/SWAP yield curve. Sensitivity relates to first 100bps increase. 17

18 FISCAL 2013 OUTLOOK RANGE (1) Financial Macro Assumptions Key Metrics $1.20 EPS 10% Market Growth NNA (3) $52B / 11% (4) High 38% Operating Margin Activity Rate of 7.0% (2) TPD 410K No change in Fed Funds NIM (5) 1.50% / IDA (6) 1.17% Increasing Yield Curve $1.00 EPS 0% Market Growth NNA $33B / 7% Low 36% Operating Margin Activity Rate of 6.0% TPD 355K No change in Fed Funds or Yield Curve NIM 1.40% / IDA 1.07% (1) See outlook statement published 10/29/2012. (2) Funded account activity rate. Average client trades per day during the period divided by the average number of total funded accounts during the period. (3) NNA (net new assets) consists of total client asset inflows, less total client asset outflows, excluding activity from business combinations. Client asset inflows include interest and dividend payments and exclude changes in client assets due to market fluctuations. Net new assets are measured based on the market value of the assets as of the date of the inflows and outflows. (4) Annual NNA growth rate as a % of client assets as of the beginning of the period. (5) NIM (net interest margin) is a measure of the net yield on our average spread-based assets. (6) Client cash is held in FDIC-insured deposit accounts (IDA) at TD Bank, N.A. and TD Bank USA N.A. TD Ameritrade, TD Bank, N.A. and TD Bank USA, N.A. are affiliated through The Toronto Dominion Bank. 18

19 TD Ameritrade, Inc., member FINRA/SIPC/NFA, is a subsidiary of TD Ameritrade Holding Corporation. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.